Samsung rings up record quarterly profits

South Korean company says smartphone sales boosted record $6.4bn net earnings, but firm halts access to users in Iran.

26 Apr 2013 10:39 GMT

Samsung expects increased smartphone competition will slow its net profit down in next three months of 2013 [EPA]

Strong smartphone sales are thought to be the driving force for South Korea's Samsung Electronics, which posted a record net profit for the first three months of the year.

In results released on Friday, the company said its net profit soared 41.6 percent to a record $6.4bn in the first quarter.

Analysts estimate Samsung shipped approximately 70 million smartphones in the first quarter of the year. The company does not release details on the number of phones it sells in its earnings reports.

In a statement, Samsung said "sound sales" of the popular Galaxy S3 smartphone had aided profit margins, but explained that second quarter global demand was "forecast to dampen".

"We may experience stiffer competition in the mobile business due to expansion of the mid-to-low-end smartphone market," Robert Yi, Samsung's senior vice president, said.

The profit figure was up from $4.4bn in the first quarter of 2012 and beat the previous record of $6.29bn set in the fourth quarter of last year.

The earnings figures were released on the same day as the new version of Samsung's flagship smartphone, the Galaxy S4, went on sale in South Korea ahead of a planned global roll-out.

Iran sanctions

A day earlier, Iranian users of Samsung mobile applications said that the company had notified them that they would no longer have access to the online store as of May 22.

The decision is seen as part of international sanctions on the country over its disputed nuclear programme.

The West has imposed banking and insurance sanctions on Iran since it suspects that Iran is pursuing nuclear weapons, a charge Tehran denies.

At a Tehran shopping mall, owners of mobile phones and tablets said that they had received the message via email from the company late the night before. Retailers said they had no power over the decision.

The decision quickly provoked anger on social media.

"Samsung is to stop its apps in Iran. Oh, how we appreciate our officials," wrote Bahareh, a Twitter user blaming Tehran's policy.

Samsung spokesman Chris Jung in Seoul said the company was still looking into the matter and could not confirm any details.

In 2012, Finnish communications giant Nokia stopped its services in the country.

In the message, Samsung said that it could not provide access to the store known as Samsung Apps in Iran because of "legal barriers."

It apologised to customers in emailed statement.

Market share

After years of following and refining the iPhone's pioneering innovations - a strategy that resulted in bitter patent battles -Samsung has beaten Apple to become the top smartphone maker on the planet.

The world's largest technology firm by value has boasted stellar sales growth, setting new records for operating profit in every single quarter of 2012.

Apple, by contrast, reported on Tuesday that its quarterly profit had dipped for the first time in nearly a decade.

But Apple's iPhone commands a profit margin double that of Samsung's smartphone stable which holds a much wider range of devices for both low and high-end buyers.